Contractual models for commissioning integrated care

Many clinical commissioning groups (CCGs) are starting to consider how they might use their commissioning and contracting tools to encourage providers to work together in different ways. There is a lot of interest and activity in new contractual forms, and a number of models are developing in different ways, and with different terminology.

The Commissioning and contracting for integrated care paper focuses on three contractual vehicles being used by commissioners to deliver integrated services. These frameworks are summarised below.

Health warning

Be aware that naming models at the outset of a new procurement project can be distracting and unhelpful. It is more important to focus on the ambitions that underpin the desired transformation and how they can be built into the terms of a contract.

Video introduction to the report

Prime contractor model

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Prime contractor model

In a prime contractor model, the CCG contracts with a single organisation (or consortium) which then sub-contracts individual providers to deliver care. The CCG retains overall accountability for the commissioned services, while the prime contractor holds each of the sub-contractors to account individually.

The prime contractor takes responsibility for designing a delivery model and patient pathway that will most effectively meet the terms of the contract. It uses the terms of the sub-contracts to stimulate and incentivise the necessary behaviours and performance it wishes to see across other providers.

Advantages of prime contractor model Disadvantages of prime contractor model
  • Simple for commissioners to manage
  • Enables pathway management
  • Shifts clinical accountability onto integrator and providers
  • High financial and relational risk for prime contractor
  • Concern over management of co-morbidities and other boundaries
  • Providers may not have sufficient skills in contracting, supply chain management and commissioning

The Commissioning and contracting for integrated care paper contains more on the prime contractor model as well as two case studies describing how it is being used in Staffordshire and Bedfordshire.

Prime provider model

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Prime provider model

The prime provider model is a significant variation on the prime contractor model in which the contracted organisation also delivers care directly as part of the agreement. The prime provider could be a new or existing provider from within the local health economy, or a consortium of providers and ‘integrators’.

Similar to the prime contractor model, a prime provider would typically receive a capitated budget to provide all care specified in the contract. The prime provider would also use this budget to ‘buy’ additional services (through sub-contracts) that it cannot deliver directly.

Advantages of prime provider model Disadvantages of prime provider model
  • Increased direct control over provision across a pathway
  • Demand risk shifts to provider(s)
  • Enables money to move within the pathway
  • Clear governance arrangements through contracts and sub-contracts
  • Possible provider monopoly
  • Perverse incentives – may limit patient choice and encourage cream-skimming
  • Provider organisation may not have sufficient skills in contracting, supply chain management and commissioning

The Commissioning and contracting for integrated care paper contains more on the prime provider model and a case study describing how it is being in Cambridgeshire.

Alliance contract model

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Alliance contract model

In an alliance contract model a set of providers enters into a single arrangement with a CCG to deliver services. Commissioners and providers are legally bound together to deliver the specific contracted service, and to share risk and responsibility for meeting the agreed outcomes. As such, they should be incentivised to innovate and identify efficiencies across the system, rather than solely within their organisation.

The alliance is reliant on high levels of trust across its relationships. Members collectively govern the alliance through a leadership board with an agreed terms of reference.

Advantages of alliance contract model Disadvantages of alliance contract model
  • Strong incentives to collaborate
  • Limits dominance of a single organisation
  • Strengthens relationship between commissioners and providers
  • Retains the active involvement of commissioners
  • Shared financial and clinical risk, reliant on the performance of other providers
  • More complex for commissioners to manage
  • Requires existing relationships founded on strong trust, which might not be present in all areas
  • Possibility of weak leadership and accountability unless appropriate governance arrangements are established

The Commissioning and contracting for integrated care paper contains more about the alliance contract model as well as two case studies describing how it is being used in Lambeth and Salford.